After Union Contract OK, Boeing to Build 777X Wing in Washington State

In what may be the least surprising press release we’ll see this year, Boeing Co. (NYSE: BA) announced Tuesday morning that it will build a new plant in Everett, Washington, where it will build the new composite wing for its 777X program. The company had threatened to build the plant somewhere else unless the local International Association of Machinists and Aerospace Workers (IAM) union approved a new contract extension in an early January vote.

The quid pro quo on the contract approval was that the company would fabricate the parts for and assemble the 777X’s composite wings in the Puget Sound area of Washington. Boeing plans to build a one-million-square-foot facility to do the work, with construction scheduled to begin later this year.

In mid-November last year, the Washington legislature approved a package of incentives worth about $8.7 billion and promised another $10 billion in infrastructure improvements if Boeing would locate the new plant in the state. A week later the IAM rejected Boeing’s contract extension offer, throwing the location of the new plant up for grabs. Boeing immediately got offers from 22 states, and at least one foreign country, to bring the plant to a more business-friendly location.

Some of the delays in the launch of Boeing’s 787 Dreamliner were attributed to the company’s outsourcing of parts to a large number of suppliers, including some located overseas. When something went wrong it took a long time for the suppliers to agree on which one fouled up and then get the fix made. Boeing certainly would like to avoid that scenario again.

Boeing shares were up about 0.2% at noon on Tuesday, at $130.34 in a 52-week range of $74.27 to $144.57.